Brazil ethanol demand could double in 10 years – agency

16 March 2012 19:08[Source: ICIS news]

PRAIA DO FORTE, Brazil (ICIS)--Brazil’s ethanol demand could double to 40bn litres/year over the next 10 years, as long as sufficient investments are made in the sector, an official with a government agency said on Friday.

Substantial investments are required in sugarcane plantations to ensure the supply of feedstocks to the country’s ethanol industry, said Rubens Freitas, deputy superintendant for supply at the Agencia Nacional de Petroleo, Gas Natural e Biocombustiveis (ANP), the Brazilian petroleum agency.

“If producers plant enough sugarcane and build enough ethanol plants we expect in the next 10 years that demand for ethanol will be about 40bn litres,” he said.

“In our vision, the main bottleneck is in the sugarcane supply,” he told ICIS on the sidelines of the 6th EBDQUIM conference hosted by Associquim/Sincoquim, the Brazilian Association of Chemical and Petrochemical Distributors. “It will be necessary to plant more sugarcane to yield more ethanol over the next three to four years.”

In the longer term, additional ethanol capacity will also be needed. “It will be necessary to build greenfield ethanol mills,” Freitas said.

The average capacity utilisation rate of Brazil’s ethanol mills is about 80%, he noted.

Brazil’s rising automotive fuels consumption is driving demand for ethanol. Anhydrous ethanol is added to Brazilian gasoline in a 20% mix, to produce a blend known as Gasoline C.

Hydrous ethanol is sold at the fuel pump for use in flexible-fuel cars, which can run on any mix of Gasoline C and hydrous ethanol. Flex-fuel cars represent about 90% of Brazil’s new car sales, Freitas said.

Drivers of flex-fuel cars choose either Gasoline C or hydrous ethanol depending on the relative prices. At the moment, they are tending to favour Gasoline C, he added.

Last month, the Brazilian government announced incentives for growers to expand their production and replant older cane.